Baidu（ BIDU +1.16%） shares have more than seen its share of troubles the last couple of months beginning with the death of a user who queried a cure for his cancer on the company’s search engine and then followed one of the results as far as treatment options were concerned. The fact that a cancer patient would follow blindly the treatment suggestions of a search engine is another question altogether but the fact remains that the tragedy has kept a lid on Baidu shares.
Since then the Chinese government announced mandated changes to search engine query results which ultimately led Baidu to lower guidance for the June quarter and for the analyst community to lower their estimates for the quarter and for the rest of 2016 as well.
However, is that all about to change for Baidu? Is the company getting ready to tap into a new and potentially very large source of revenues based on the daily data it collects from the billions of search queries it receives daily?
Reportedly, Baidu search and Baidu maps and other Baidu sites get about 25 billionlocation and other data queries from the 700 million users that use its sites daily. About half of China’s population is using Baidu’s sites if that 700 million users statistic is accurate.
An additional lucrative revenue opportunity could be the release of Chinese macro-economic data for users all over the world. How many times have you heard pundits, gurus and swamis on television question the accuracy of official Chinese government economic data? In addition, the Chinese government could use Baidu collected data to back up its own economic releases, if they decide to do so.
Baidu’s massive user base “represents a good portion of Chinese consumer behavior,” said Wu Haishan, a senior data scientist at the company. “We think the government will also look forward to having other options, a way to look at this from a different angle.”
Finally, think about how much companies will pay for the use of this sort of data that has the ability to pinpoint location based services. The example used in the article I have linked to above uses Starbucks SBUX +0.28% but just about any business, large, medium or small can use this data to accurately pinpoint demand for its goods or services.